Figure 5-1 Shows the Preferences of a Consumer for Food

question 85

Multiple Choice

Figure 5-1 shows the preferences of a consumer for food and other goods.He is initially in equilibrium at point A where the budget line MN is tangent to the indifference curve.
Figure 5-1
-In Figure 5-1,the effect of substituting an equal-cost lump-sum grant for an excise subsidy is to _____.

• A)increase consumption of food by GJ
• B)decrease consumption of food by HJ
• C)keep food consumption unchanged
• D)decrease consumption of other goods by EK